ICAO Regional Facilitation Workshop Lima, Perú, June 17-21 th, 2013
SF Background Why - Inconsistent security regulatory environment with limited international recognition When 2008 until today Who IATA, CAA s, Gov. Agencies, Intl Org and Supply Chain Industry at every location Mission - Promote the implementation of global air cargo supply chain security standards and programs with regulatory support around the world in order to facilitate safe, secure and efficient operations of air cargo
Fundamentally, SF can help ensure that freight is secured upstream and then protected throughout the supply chain Relevant areas of key SF products Secured Protected Shipper Haulier Freight forwarder Haulier Departure airport Secure carrier Secure preparation Secure packing Secure handover Record & communicate security log Secure receipt Protect the shipment Secure transport Secure handover Report incidents Secure receipt Verify chain integrity Separate & protect the shipment Secure handover Record & communicate security log Secure receipt Protect the shipment Secure transport Secure handover Report incidents Secure warehouse Secure airside ops Contractors to be SFO* Increase screening competence Verify chain integrity Contractors to be SFO* Oversee & control the procedures Record and communicate security log Ground handler Transhipment airport Relevant areas of key SF products Secure Freight standard manual Secure Freight operational procedures^ Secure receipt Verify chain integrity Separate & protect Secure handover Record and communicate security log Secure receipt Secure airside ops Verify chain integrity Secure warehouse Secure handover
The Network: 2008-2013 CAN USA MEX UK RU NL EU JO BAH IN EG UAE TH KR KE MY BR CL MY (done) KE, MEX (2011) CL, EG (2012) UAE, JO, BAH, BR (2013) RU, KR, TH, IN (under discussions)
Relevance ICAO HLCAS recommendations: Development of an International Capacity Building Strategy specific to air cargo and mail security ICAO, States and industry should continue to focus on the provision of coordinated security assistance using appropriate information-sharing mechanisms for targeted assistance to Capacity Building for Air Cargo Security In 2013 IATA delivered the SF Forum, is now a member of the subgroup for Capacity Building Strategy (WGACS) and presented the Working Paper 26 during ICAO s 24 th AVSEC Panel meeting
ICAO 24 th AVSEC Panel Recognition of SF s value by the Panel Highlighted the importance, effectiveness and positive impact IATA has had by helping states in securing their cargo supply chain Comments also encouraged other states to use this model as an option when securing their supply chains (Mexico) Actions for ICAO include among others. ICAO s WGACS to design a roadmap for the recognition of cargo security regimes This could be supported by the best practices from regimes that have already gone through this process of recognition i.e. the USA and EC, and the USA and Canada IATA to further explain to Secretariat on what we mean by a roadmap for the recognition of cargo security regimes SF participant countries want to understand what needs to be done in advance for a State to recognize their cargo security programs, and what are the steps required for this to happen
ICAO 24 th AVSEC Panel Secretariat to Identify the similarities between the Regulated Agent and Authorized Economic Operator programs on-going work at the WGACS WCO and ICAO to develop globally recognized standards for advance cargo information work has already started and will be continued by both organizations with IATA s support, among other industry representatives ICAO s Secretariat to develop a pamphlet or an appropriate communication piece to be distributed to states, including the list of programs and capacity building programs available for States this does not imply any particular endorsement, but all assistance available shall be made visible to States AVSEC Security branch was encouraged to continue their on-going support to all SF Locations from its regional offices: Cairo an example
ICAO 24 th AVSEC Panel Actions for IATA include: SF value case study and model to be presented and shared in the next Working Group on Air Cargo Security meeting (Australia, June) Facilitation and Security workshops in LATAM (Mexico and Lima) Further support definition of a roadmap for the recognition of cargo security regimes requested
What brought us here? Malaysia Case The Need Secure air cargo network Regulatory framework Simplified business process Mutual Recognition
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Secure Freight s Value Proposition Enhanced national security Prevention of acts of unlawful interference Economic benefits for your country Direct benefits from cost and time savings More competitive Indirect benefits from job creation and tax revenues
Methodology Potential benefits were based on MY s experience Gather data on MY air freight market for estimating national-level potential benefits from SF Conduct research on direct sources and interviews (direct pilot participants, industry association and companies in MY logistics market, government agencies) Include main exports and non-high tech/ electronics industry sectors Evaluation of Pilot specific impacts from SF participants Reduction/ Elimination of Cargo Loss & Mishandling Increase supply chain efficiency Increase collaboration and transparency of supply chain process Increase country trade s competitiveness Facilitation of cargo at international level (eliminate redundant sec check)
Cannot always put a money value to benefits Strengthen global reputation Enhance transparency and collaboration between government agencies and industry Streamline business processes Non-quantifiable benefits of SF Become air security leader Facilitate recognition of the state's air cargo security program by other states Enhance national security / prevent acts of unlawful interference
Economic benefits can be quantified Improved operational efficiencies Cost savings from adopting SF Time savings from adopting SF Fewer cargo losses, mishandling No redundant security procedures Lower investigation costs Fewer supply chain interruptions Reduced redundant security checks Uniform standards Net direct economic benefits Standardization of security systems Increased accountability and visibility Enhanced transparency and harmonization Benefits Greater national competitiveness Increased investment attractiveness Cost and time benefits Associated costs Up-front investments in infrastructure upgrades Ongoing auditing costs Costs
Efficiency gains were material for MY Key assumptions Without SF With SF Decreased cargo mishandling incidence Reduced investigation costs Other cost savings Potential increase in sales perishable industry Potential increase in sales non-perishable industries 1% mishandling incidence USD 3,000 7,000 per incident c. USD 3 million per ground handler per airport n/a n/a 0.1 0.4% mishandling incidence 60 90% decrease in number of incidents c. USD 2 million per ground handler per airport 5 10% at operating margin of 15% 1 2% at operating margin of 11%
Economic benefit far outweighs cost Expected benefits Units Value of net benefits (Full implementation) Economic benefit (GDP) Millions of USD 400-700 300 530 Value of net benefits (Selective implementation) - Direct industry benefit Millions of USD 350 620 270 470 - Wages from new jobs Cumulative job creation over 5 years Annual incremental tax revenue for Government Millions of USD 50 80 30 60 Jobs 4,600 8,000 3,400 6,000 Millions of USD 100 180 75 130 Estimated investment required Millions of USD 300 600 c.10
Potential Benefits: Malaysia 2008-2011 For us the greatest challenge and also the greatest benefit of SF is that we had to sit down and write our procedures Manager AVSEC, Malaysia Airports Holdings Berhad (MAHB) SF helps harmonize procedures and improve supply chain efficiency. With SF, everything is smooth sailing Operations & Freight Specialist, Intel, Malaysia
Potential Benefits: Malaysia 2008-2011 The improvement in air cargo will definitely help make Malaysia s exporters become more competitive Head of Airport Development Unit, Ministry of Transport With the better freight program and efficiency, shippers will benefit most. Shippers are facing competition from outside the country, and if they can do well in shipping, they will be able to compete better Operations & Freight Specialist, Intel, Malaysia If there is greater air freight security in Malaysia, we can potentially increase export volumes by 10%. It would be like a feather in our cap if we can implement SF nationally Manager (Cargo Operations Security), MASkargo
Potential Benefits: Malaysia 2008-2011 Companies making for investment decisions will consider the logistics chain, and countries that have SF will stand out. For developing countries, logistics is an important factor to evaluate Senior Director, The International Air Cargo Association We neither bought any additional equipment, nor hire more guards. For us, SF is more about changes in procedures, and we did not see any noticeable increase in our ongoing operating costs Head of Security, DHL, Malaysia
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